The AI boom has spiked energy demand, and as Big Tech firms and data center developers have scrounged for power, the fastest way to meet that demand has been with natural gas.
In Texas, natural gas producer Comstock Resources (CRK) is sitting on what it calls the “holy grail” of gas-rich land, company executives said during the most recent earnings call.
The key to success for the company — whose largest shareholder is Dallas Cowboys owner Jerry Jones — is a portfolio of land, acquired in 2019, throughout the far western area of the Haynesville Shale Basin in eastern Texas.
The region has become the most exciting frontier shale patch in Texas — and one of the most promising in the country — for exploration and production companies willing to take the risk on “wildcatting,” or drilling new wells in untested land.
Comstock is far and away the leader, thanks to a prescient acquisition and aggressive approach to drilling. The company, sitting on a massive amount of natural gas in the Western Haynesville, is poised to heavily benefit from the skyrocketing demand for power from data center developers hungry for land and power.
“One hundred miles from Dallas and the same distance from Houston and really close to [the liquid natural gas] LNG corridor, you’re perfectly situated for both AI, data centers and LNG, so you couldn’t be in a better area,” Comstock COO Daniel Harrison said on the company’s third quarter earnings call.
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Comstock, headquartered in Frisco, Texas, has long drilled for natural gas throughout the Haynesville area, one of the most prolific natural gas plays in the country, according to the Energy Information Agency.
But in 2019, Comstock bought the natural gas exploration and production (E&P) company Covey Park Energy in an acquisition valued at $2.2 billion. Jones, who took a controlling stake in Comstock the year before, contributed $475 million to the Covey Park deal. According to the Wall Street Journal, Jones has invested $1 billion in Comstock altogether.
The main focus of the acquisition was a swath of land tacked on to Comstock’s primary legacy Haynesville acreage. But the deal also added a few small bits of land north of Houston, farther west than Comstock’s activity had been concentrated.
Dallas Cowboys owner Jerry Jones, right, talks with Denver Broncos owners Greg Penner and Carrie Walton Penner before an NFL football game on Oct. 26 in Denver. (AP Photo/Jack Dempsey) · ASSOCIATED PRESS
The Western Haynesville region wasn’t unexplored. An E&P called Ovinitiv (OVV), previously Encana, had drilled throughout the land in the early to mid-2010s, but conditions were tough.
The gas-producing rock is located some 14,000 to 19,000 feet below the surface, according to public comments from Comstock executives — an extraordinary depth even by gas drilling standards. The pressure that far beneath the Earth’s surface is extreme.
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